$65M Refinance for Miracle Mile Office Building
- Mar 30, 2011
March 29, 2011
By Barbra Murray, Contributing Editor
The 452,800-square-foot office building at 5900 Wilshire Blvd. in the Miracle Mile district of Los Angeles has been refinanced to the tune of $65 million, courtesy of a transaction orchestrated by commercial real estates services firm Holliday Fenoglio Fowler.
Developed in 1971 and occupied by the Mutual Benefit Life Co. for two decades, 5900 Wilshire is widely known as the Variety Building for its lead tenant, entertainment trade publication Variety, which leased 55,000 square feet for its West Coast headquarters in 2008. A joint venture involving The Ratkovich Co. and Prudential Real Estate Investors, acquired the property for $100 million in 2005, with HFF orchestrating financing, and completed a $34 million renovation spearheaded by the architectural firm of Johnson Fain three years later. The 31-story tower, located across from the Los Angeles County Museum of Art, has since become a mecca for media and entertainment concerns. Occupants include the likes of Los Angeles Magazine, Millennium Entertainment and The New York Times’ Los Angeles bureau.
Presently, 5900 Wilshire is only 70 percent leased, but the financing community was not deterred by the empty spaces on the tenant roster. “That was a challenge, but the lenders understood that the market had been slowed down by the downturn, and that things would pickup,” John Crump, director with HFF, told CPE.
Ultimately, AXA Equitable Life Insurance Co., acting through its advisor, Quadrant Real Estate Advisors, provided the joint venture with a five-year, 5.72 percent fixed-rate loan. “What the lender found attractive was the fact that 5900 is a newly renovated building, there was strong sponsorship and the leverage request was very low, roughly 55 percent,” Crump noted. “Also, the lender had a good knowledge of the Miracle Mile submarket. The great thing about Miracle Mile is that it’s equidistant from West Los Angeles and Downtown, and it’s within pretty close proximity to Hollywood.”
The Miracle Mile area is turning around. Its overall office vacancy rate dropped a full percentage point from the third quarter to the fourth quarter of 2010, according to a report by commercial real estate services firm Colliers International.